Current Marketing Thoughts

Kevin Van Trump has over 20 years of experience in the grain and livestock industry.

Should we start worrying about global supplies?

May 15, 2013

Goldman Sachs pointed out yesterday that the strong correlation between the US stock market and commodities, that has taken place for the past decade, looks to have come to a screeching halt. If you recall, back in Oct 2007, the last time US stock market was soaring to new highs, commodity prices where exploding as well. Today we have the US stock market posting NEW all-time highs every other day, while commodity prices continue to weaken. From what I heard Goldman remains "neutral" on commodities, sighting micro-economic drivers such as rising energy supplies and metal inventories beginning to reassert themselves. Thinking we may be in a cycle of excess capacity and slow growth...essentially meaning lack of returns in commodities. In my opinion we are seeing the exact same thing happening in global agriculture. Higher prices have encouraged an increase in supply, while weak global growth may trigger a period of excess rather than a period of short supply. Certainly this is a view from 10,000 feet, but often times as producers we get ourselves too deep in the forest to see the trees. Just make certain you are seeing the entire macro view and perspective, not just looking out your own backdoor!CLICK HERE for my full report and details on what I see moving the markets next week...